Monday, January 30, 2012

As described in our previous post, Should my Child Support Change?, there are two types of court orders which always merge into the Judgment, meaning they can be modified if there is a material and significant change in circumstances: child custody and child support.

The Court retains jurisdiction over provisions relating to child custody and visitation to protect the children. For example, in the event one party becomes unfit to parent the children it would be detrimental to the children to have that provision survive and be unchangeable.

This means that if there is a change in circumstances which has caused your children to be put in an unsafe situation, you can bring that change to the court’s attention and potentially obtain a change in the custody and parenting plan orders. If the change is an emergency situation, then you can request that the court immediately transfer custody or limit parenting rights by filing an Emergency Motion along with an Emergency Affidavit.

In order to make a change on an Emergency Motion the emergency must be significant enough for the court to make a change without the opportunity for the other party to be heard. Usually an order after an Emergency hearing will only last for a few days until the other party can attend a hearing and tell their side of the story.

Some examples of significant enough events to constitute an emergency are a parent abusing the child, taking illegal substances, being admitted to a psychiatric facility, or being arrested on a charge that would affect their parenting fitness.

Of course, if you are witnessing an immediate threat to your child’s safety then you should immediately call the police. Courts can only change orders, which are just pieces of paper. Pieces of paper don’t protect your children without proper enforcement.

Thursday, January 26, 2012

Whether or not an alimony order can be modified post-divorce depends first on whether the order merged or survived. Many decisions in a divorce agreement, such as property division, survive the Judgment and cannot be changed. When reaching an agreement, spouses can decide whether or not to make alimony orders or waivers permanent by surviving them or merge them into the Judgment. If merged this means that such orders can be modified if there is a material and significant change in circumstances. Merging alimony orders is more typical because no one knows exactly what could change in the future.

In addition, under both the current law and the new law (which takes effect on March 1, 2012), alimony orders that merged can be modified if there has been a material and significant change in circumstances.

In order to modify alimony you must file a Complaint for Modification. If you are able to agree to a change with your ex (either directly, through mediation, or through collaborative negotiation) then you can file an agreement with your Complaint and request an uncontested hearing. If you can’t agree, then you must file a Complaint for Modification which tells the court what has changed.

To succeed on a Complaint for Modification you must prove two things: first you must prove that there has been a "significant material change in circumstances;" and second you must prove that the change in circumstances warrants a change in the Order.

A "significant material change in circumstances" is simply explained as a change in your life that is big enough to have an effect on the factors that related to the original Order of the Court. For example, if the Order that you want to change is alimony, then you must demonstrate that there has been a change to the factors that affect an alimony determination, such as the income of the parties, expenses of the parties or needs of the parties. In addition, you must demonstrate that that change is significant.

Tuesday, January 24, 2012

In our last post we explored reasons that there may be some inequities post-divorce that cannot be remedied. Many decisions in a divorce agreement, such as property division, survive the Judgment and cannot be changed.

However, there are two types of court orders which always merge into the Judgment, meaning they can be modified if there is a material and significant change in circumstances: child custody and child support.

The Court retains jurisdiction over provisions relating to child custody and visitation to protect the children. For example, in the event one party becomes unfit to parent the children it would be detrimental to the children to have that provision survive and be unchangeable. Although typically paid to the custodial parent, child support is also for the benefit of the child, not the parent. Therefore, you cannot give away your child's right to seek greater child support if there is a material and significant change in circumstances.

In order to modify child support you must file a Complaint for Modification or a Joint Petition for Modification. If you are able to agree to a change with your ex (either directly, through mediation, or through collaborative negotiation) then you can file a Joint Petition for Modification of Child Support. If you can’t agree, then you must file a Complaint for Modification which tells the court what has changed.
To succeed on a Complaint for Modification you must prove two things: first you must prove that there has been a "significant material change in circumstances;" and second you must prove that the change in circumstances warrants a change in the Order.

A "significant material change in circumstances" is simply explained as a change in your life that is big enough to have an effect on the factors that related to the original Order of the Court. For example, if the Order that you want to change is a Child Support Order, then you must demonstrate that there has been a change to the factors that affect a Child Support determination, such as the income of the parties, expenses of the parties or needs of the children. In addition, you must demonstrate that that change is significant. In Child Support cases a good rule of thumb for determining significance is whether or not the change in circumstances would result in a 20% change in the Child Support Order.

Friday, January 20, 2012

While our last post explored what happens when your ex violates the Divorce Judgment, what happens if everyone is following the agreement perfectly, but one of you has clearly got an advantage?

A common complaint that potential clients express to us is a dissatisfaction with their prior agreement or judgment because their ex-spouse seems to be doing very well. They might have a bigger house, or take a lot of vacations, or have a really nice car. In some cases this is a legitimate indicator that a support order may not be fair, and in those cases a Complaint for Modification may be warranted (our next few posts will address when this is appropriate).

However, many times this imbalance reflects something which can’t be fixed by a Complaint for Modification. In some cases exes have not fully accepted the divorce yet, and comparing your lifestyle to your exes is an indication that you haven’t yet moved on. Even with a well-crafted agreement your life is unlikely to turn out exactly equal to your exes.

Many couples divorce because they have different views on finances and in these cases usually one spouse is good at budgeting and the other is not. Divorce doesn’t change these habits, and a spender will still be a spender and a saver will still be a saver. A few years after a divorce, these different habits will become evident in the lifestyle of each ex-spouse. One of the consequences of separating your finances in the divorce is to give each person the chance to fail or succeed on their own, and if your ex has succeeded because they manage their finances better you have no legal (or moral) right to gain an ongoing benefit from that success.

In other cases, the imbalance that has been created is due to poor choices that were made at the time of the divorce. Both you and your ex-spouse may be equally good at budgeting, but if you made poor financial trades in your property division then you may be feeling the consequences of that now. For example if you were divorced in 2004 (prior to the housing market crash) and you took house equity in exchange for your spouse taking other assets, then you probably lost out on that deal. Your ex might still have close to their original value of assets, while you are left with little to no home equity.

I have often tried to explain to divorcing clients that trading one type of asset for another often has both tax consequences and risk/benefit consequences. Pinning one’s hopes in the housing market for their retirement is not always the best idea (especially not right now). However, many people still choose to trade different types of assets, in order to meet a non-financial goal, such as being able to stay in their home.

Once a property division is completed, these types of decisions, and their consequences, cannot be revisited. The importance of understanding your property division and its potential consequences is one of the most important reasons to consult with good legal counsel, and oftentimes with financial planning experts as well.

Wednesday, January 18, 2012

Unfortunately, sometimes the end of a case isn't the end of a dispute. Often two people who just don't get along anymore end up back in court to resolve an issue that arises after the divorce case has ended. Whether the case ended with an agreement (usually called a "Separation Agreement" or a "Divorce Agreement") or with a trial, there will be a judgment dividing the assets and liabilities of the former spouses, and defining any support or other obligations owed to each other, or to any children.

This Judgment can be amended or enforced as necessary and dependent on certain circumstances. Our next series of posts, entitled Post Divorce Problems, will address some of the common reasons that you could end up back in court, post-judgment.

In some instances, ex-spouses return to court when one party fails to follow the judgment. When the judgment is clear (and unambiguous) as to what that individual is supposed to do, or not do, and that individual violates the judgment, the aggrieved party can file a Complaint for Contempt. In short, a complaint for contempt is a new lawsuit in which one person is accusing the other person of not following the judgment and requesting sanctions.

There are two types of contempts: civil and criminal. The goal of a civil contempt is to force compliance with the violated court order, and they are far more common than criminal contempts. The goal of a criminal contempt is to punish the other party for violating the earlier court order. Civil contempts are more common because usually you want the person to be forced to do what they were ordered to do in the first place, not just be punished for their failure to comply.

Monday, January 16, 2012

On your Federal Income Tax Return you can claim an exemption for each qualifying child, which for the tax year 2011 will result in a $3,700 per dependent credit off of your taxable income. Depending on your tax bracket this could save you as much as $1,295 in federal taxes.

But if you are separated or divorced and filing separate federal income tax returns, who gets the exemption?

First of all, you can't both take it. Only one of the parents can use the exemption for each child on their return. If you both claim a child, the IRS will reject your return and send you a letter indicating that you must amend.

So which one of the parents gets to use the exemption?

Pursuant to IRS Publication 501, the IRS considers a child of divorced or separated parents in most cases to be the qualifying child of the custodial parent only. The IRS defines custodial parent as "the parent with whom the child lived for the greater number of nights during the year. The other parent is the noncustodial parent."

It doesn't matter if your agreement says you share custody. If one parent has the child more than 50% of the time, then that parent is the custodial parent as far as the IRS is concerned. ("If the child lived with each parent for an equal number of nights during the year, the custodial parent is the parent with the higher adjusted gross income (AGI).")

It is possible, though, to transfer the exemption from the "custodial" parent to the "noncustodial" parent. Some division of this benefit is often negotiated as part of a divorce agreement or ordered by a Judge, to give the noncustodial parent some tax credit in exchange for the child support that they pay from post-tax income. In the case of one child, the exemption can be alternated from year to year, or when there are multiple children the exemptions can be divided between parents.

In order for this transfer to be allowed by the IRS, certain rules must be complied with. According to Publication 501, a child can be treated as the qualifying child of the noncustodial parent if four requirements are satisfied:

The parents are divorced or legally separated under a decree of divorce or separate maintenance, the parents are separated under a written separation agreement, or lived apart at all times during the last 6 months of the year, whether or not they are or were married;

The child received over half of his or her support for the year from the parents;

The child is in the custody of one or both parents for more than half of the year; and

The custodial parent signs a written declaration,
Form 8332, that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches this written declaration to his or her return. (For cases prior to 2008 this requirement is slightly different and you should review Publication 501 further).

If you have a divorce agreement that states that the non-custodial parent gets the child's tax exemption, then Form 8332 must be completed or the IRS could reject the return. If the custodial parent refuses to sign Form 8332 then you must file a Complaint for Contempt with the Probate & Family Court. The IRS will not honor the divorce agreement without a signed form 8332.

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